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New-Car Colors That Can Boost Resale Values

It sounds a bit confounding on its face, but data suggests some car colors can bring more money back to an owner at trade-in time than others. And in what would seem to be a gross violation of the law of supply and demand, the hues that new-car buyers (and dealers) largely shun in the first place are the ones statistics indicate will reap the biggest rewards in the used-vehicle market.

Yellow, a color typically associated with lemons – not exactly an image most original owners prefer to embrace – leads the pack in this regard. On average a yellow car that originally cost $20,000 can be expected to retain about $1,500 more of its value after five years than the same exact car painted black.

That’s according to an analysis of over 20 million used car listings from the 1981 through 2010 model years conducted by the Boston-based used-vehicle website iSeeCars.com. Other colors the study found that bring back the most green include orange, teal and – of course – green.

(Photo credit: visualpanic)

“While a popular car color like black or silver may get more interest and sell faster, our analysis indicates it may not get as high a value as a car, say, in yellow,” says Phong Ly, CEO and co-founder of iSeeCars.com. “Scarcity may account for the difference – only 1.1 percent of all cars are yellow and orange; the dearth of supply of such colors may drive prices up.”

According to automotive paint supplier PPG Industries, white was the most popular new-vehicle color among new-car buyers in North America last year at 21 percent of the market, followed by the similarly neutral black (19 percent), gray (17 percent) and silver (15 percent).

Here’s how cars in the various colors of the automotive rainbow stack up in terms of their average depreciation rates after five years of ownership, according to the iSeeCars.com analysis:

Yellow: 26.2%

Orange: 27.6%

Green: 31.3%

Teal: 31.4%

Red: 31.7%

Beige, Brown, Gold: 33.3%

Average: 33.6%

Blue: 33.6%

White: 33.7%

Silver: 34.0%

Gray: 34.2%

Black: 34.4%

What’s more, the study found these rates tend to be consistent among all vehicle categories, though it should be noted that one is more likely to find a sports coupe or convertible offered in eye-popping hues like orange and yellow in the first place than a more-conservative family sedan or station wagon, where the “non-colors” tend to proliferate.

And we should also point out that the projected losses in value quoted here seem way too low to our jaded eyes – we’ve seen the industry average five-year depreciation rate quoted as high as 63 percent. Still, we’re told this is largely because of the methodology, specifically because projected depreciation is based on listing, rather than transaction, prices. At the least such numbers would indicate a trend.

Perhaps used car buyers, strapped for cash as it is, are more inclined to choose an expressive color that stands out in a crowd, while those in the new-vehicle market may instead prefer to just blend in. Or it’s just the forces of supply and demand exerting their unflappable influence once again – a larger pool of buyers in the used market mean there are inherently more of them out there who may be seeking unconventional colors that are otherwise difficult to come by.

No matter, if the numbers here indeed hold up it could mean a double bonus for astute new car shoppers. Models painted in oddball shades that languish on a dealer’s lot for a lack of interest can usually be purchased at a lower negotiated price than those which are offered in more common colors. Cars that don’t sell quickly cost dealerships money in terms of financing and other expenses, affording an added incentive to clear them from inventory even if it means shaving their markups down to the bare skin. Add a nominal bump in resale value down the road and it’s a win-win situation.

At least for new-car buyers who are willing to drive – let alone find – the vehicle of their choice painted yellow, orange, teal or green.

The fine print: The above projections were based on more than 20 million used vehicle listings from the 1981 to 2010 model years, with depreciation calculated for each car and color based on its original MSRP (adjusted for inflation, based on Bureau of Labor Statistics data), its used car listing price and the vehicle’s age. Cars of the same color were then aggregated to determine the average depreciation over five years for each color. Here’s a link to the full study.

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